Following the 2017 tax reform package, Colorado has collected excess revenue that the state’s TaxPayer’s Bill of Rights (TABOR) amendment to the Colorado State Constitution is kicking in. Taxpayers will be receiving their refund by way of a temporary reduction in state income tax rates. For the 2019 tax year, the state’s income tax rate will be reduced from 4.63% to 4.50%. It applies to all income tax returns for tax year 2019, including:
- Personal income tax returns;
- Corporation income tax returns;
- Partnership and S corporation income tax returns; and,
- Fiduciary income tax returns.
TABOR limits the amount of revenue the state can keep when certain limits are met. The first $150 million above the revenue limit is returned to local governments. Amounts in excess of that get returned as either a temporary income tax rate cut or a sales tax refund.
The rate reduction is automatic and will apply when taxpayers file their 2019 income tax returns. Unless other legislative action, the rate will return to the typical 4.63% for proceeding tax years.
Additional information is available at Colorado.gov – Tabor.
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Meredith Smith can be reached at msmith@taxops.com.
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